Contract of Sale when Buying Real Estate Property
The buyer of real estate, as a rule, is assisted by a whole team led by a broker and a lawyer. Their task is to learn the maximum about the object and prepare all the necessary papers. However, it is important for the buyer to know what will be written in the most important of them – in the contract. Let's consider the main points of the contract.
- Purchase price
The contract specifies the price of the object and payment terms. As a rule, the buyer can get a delay in closing the transaction for 15-30 days. However, an extension of more than 30 days is at the sole discretion of the seller.
According to standard conditions, a deposit (10%) is made upon signing, and the balance is paid upon closing (usually 60-90 days from the date of signing the contract) by a certified payment. The money is kept in an escrow account with the seller's lawyer.
The contract specifies detailed information about the buyer.
If the rules of the building allow the maintenance of pets, this should be spelled out in detail in the contract.
- Personal property
The apartment may contain furnishings such as kitchen appliances, furniture, air conditioners, lighting fixtures, carpentry, washing machine, dryer, etc. You can agree that some of them will go to you, and then the list of those things that will be included in the sale should also be in the contract.
At the same time, you should proceed from the fact that the objects of personal property do not pass to you, unless the contract explicitly states that they are included in the transaction amount.
- The condition of the property
As a rule, contracts for the sale of secondary real estate provide for the sale of the object in the "as is" state.
Popular pitfalls when buying a condo
Most contracts for the purchase of an apartment do not include an inspection of the house. Buyers save money at this stage, because they know that the responsibility for maintenance, repair of common parts of the building and communication systems is borne by the management of the building.
However, if the buyer and the seller have agreed that the seller will repair the apartment before closing the transaction, this agreement should be included in the contract.
By-laws of the condominium provide for the full responsibility of the owner of the premises for the maintenance and repair of everything inside the apartment (including water pipes, heating and electrical networks). Therefore, the contract must contain a clause stating that these devices and systems must be in working condition at the time of closing the transaction.
After closing the transaction, you will be responsible for all the costs of repairing the apartment, so it is very important that you imagine its condition before signing the contract. The contract must also specify that the seller transfers the premises empty and clean.
Inspection when purchasing a real estate
If you are buying a house, it will be necessary to hire an inspector or an engineer to conduct an inspection. He will check the general condition of the building, heating system, water supply, electricity, household appliances, roof and foundation. The seller's liability ends at the time of the transaction. Therefore, in order to avoid conflicts, the seller usually insists on inspecting the house before signing the contract.
If the buyer is dissatisfied with its results, he can withdraw from the transaction, and then both parties will save money to pay for legal services. Of course, you can try and negotiate with the seller to eliminate the defects found during the inspection of the house, or to reduce the purchase price.
The buyer is recommended to be present during the inspection and accompany the inspector. The specialist will point out problems as they are discovered, that is, the buyer will not have to wait for a written report – this delays the time of contract approval.
Tests for the presence of water, the condition of fuel tanks, the absence of radon and termites can take up to two weeks. If the results of any of these tests turn out to be unsatisfactory, the contract will most likely indicate that the seller must fix the problem before closing the transaction, and if the seller decides not to do this, the buyer will have the right to terminate the contract.
Closing date of the transaction
Although the contract specifies a specific date, this is only an estimated date, since between the signing of the contract and the closing of the transaction, the buyer will have to perform many actions, the timing of which in most cases does not depend on him.
Unforeseen financial circumstances
If the buyer is refused a loan, this clause will allow him/her to terminate the contract and get the initial payment back in full. This paragraph specifies the maximum amount of financing for which the buyer can apply, and the maximum allowable loan term.
As a rule, this provision allows the buyer to receive a letter of commitment on the loan within 30-45 days or terminate the contract if the letter of commitment is not received within the specified time period.
Presence of lead-based paint
A few years ago, the federal government passed a law requiring the seller to disclose to the buyer any information about the presence of lead-based paint or traces of it in the house. It is important for the buyer to know about this, because small children can suffer from lead. If they swallow pieces of lead paint or inhale particles of lead dust, they can get neurological diseases.
Although lead-based paint has been banned since 1978, it can still be found in old houses. At the same time, its presence is not considered dangerous if the surfaces of the house are kept in proper condition or have been repainted with lead-free paint.
If the house was built before 1978, the contract must contain written testimony from the seller, in which he must indicate whether he knows about the presence of lead-based paint or risk zones in connection with it somewhere in the dwelling.
Refusal of the condominium from the pre-emptive right
This is rare, but the condominium board of governors has the right to buy an apartment on behalf of the condominium, after the seller has concluded a contract of sale with the buyer. Therefore, the contract should stipulate that the members of the board of directors of the condominium waive their right to purchase an apartment.
The contract, as a rule, specifies that the condition of the transaction is the transfer by the seller of a house or apartment that is exempt from any lawsuits, liens, mortgages, property tax arrears or other encumbrances with respect to the property.
If you are buying an apartment in a condominium or a house, your lawyer, after signing the contract, will order a report on the ownership and send copies of it to the seller's lawyers and your lender. If the report reveals defects in the seller's title, the seller's lawyer will have to eliminate them before closing the transaction.
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